Budget 2014: Let’s get social – or stay economic?

As I’ve said before, what’s there not to like about the Budget? We can argue about nuts and bolts and whether more or less (usually more) should be handed out, at what sort of pace ecetera. But, face it, who’s going to turn down a handout? Even if it doesn’t come to us directly – but to a segment of the population whom it would be churlish for anyone of us to deny?

If the MPs had their way, the over-65s would be armed with a card that says Singapore Pioneer and have all the benefits that come with the Pioneer Generation Package come much earlier so that they would medically-covered immediately. What’s interesting is that no one called for the benefits to be means-tested. That’s good methinks. Rather than divide the elderly into housing type or household income, they all get more or less the same benefits. Saves a lot of quibbling.  

Anyway this is package as a “reward’’ for “contribution’’, more than a social welfare system (which it is actually but only for the pioneer generation). So it does mean that something must be done to ensure that the below-65s won’t need another similar package when they get older. The review committee on Medishield is supposed to fix this. Good luck to them – and to those of us below-65.

So what to say about the first day of debate?

Well, the G is spending more than it is raking in – something no one really quarrels with. Part of it has to do with the perception that the G is rich and can afford to do so. But it’s really taking part of the Net Investment Income that’s been generated by reserves to fund the $8b pioneer package. Question: The cap is 50 per cent of NII. Has it reached that cap?  

There are also two sets of arguments on social spending: One school argues that we should be fiscally prudent – or people will think that there’s more money where the pioneer package came from. That we have a bottomless pit. Already, some wonder why the package was so “late’’ – and whether it could be extended to more people. So should we think harder about saving for the long-term? Or spending now?

The other school argues that we can do more on the social front – do it now or the chance would pass and we’ll regret it. Put social considerations before economic hard-headedness. In other words, we CAN afford to do now and we should. Like give free education for children from age 3.

There are worthy considerations and reflect deeper thinking about the way we run the country finances. What is the economic philosophy that will underpin our finances from here? This Budget is already a big break from the past with the pioneer generation package. It isn’t based on economic considerations – the old will NOT get more productive and oil the wheels of the economy. It is social policy to keep the old healthy and happy after their years of hard work. We can’t repeat this for different segments of the population without considering the maths.

Quotes that reflect this:   

PAP’s Seah Kian Peng: “Long-term thinking and planning do have their place. For years, Singaporeans have been socialised to think long-term, tighten our belts, make sacrifices and defer consumption … but perhaps it is time to take in the counter-narrative. Let us not sacrifice too much for the long-term, and regret 50 years later, that we did not do the right thing at the right time.” 

PAP’s Alvin Yeo:  “A dependence mindset where we expect some government agency to step in and take care of us — regardless of whether we can take care of ourselves — will lead ultimately to the breaking down of what has been built so far.” 

PAP’s Liang Eng Hwa: “Although we still have a primary surplus, it is not difficult to see that total expenditures are clearly growing at a faster rate than operating revenue. In business budgeting, this phenomenon is known as a negative jaw (that is, growth in expenditure exceeding growth in revenue). If left unchecked, where expenditure continues to grow at a faster rate than revenues, we could end up with a ballooning budget deficit situation in the years to come. To balance budgets, governments have to either cut spending or raises taxes, or do both.” 

 The pro-business MPs seem to want more help (benefits?) for companies in restructuring and raising productivity. Yes, there are those who point out that a lot of money has been spent to too little advantage (productivity is still flat) but they still asked for tweaks anyway especially for the small businessman.

Really, we need a report card on whether we’re getting our money’s worth rather than simply extending, say, the Productivity Incentive Credit because to withdraw it will provoke howls of protest. (The G should know by now that it is difficult to stop giving once you’ve started. Like GST vouchers. Sure got even more howls if they are stopped.)   Then again, the counter-argument is that real, tangible benefits would take time to appear. So it means we have to take it on… aaah…faith?

(Anyway, I sure hope companies aren’t just taking advantage for the sake of taking advantage but also pruning manpower in the process. Which means we need jobs for the out-of-work….Well, who said policymaking was easy?)

It’s an interesting start to the debate and MPs seem to have caught on that they need “human interest’’ stories to draw attention to their speeches. So WP’s Sylvia Lim talks about her father, PAP’s Seah Kian Peng talks about a university don who treats migrant workers for free and other MPs recounted anecdotes from their grassroots work. 

Interesting. Interesting.

Better than heaping a tonne of praise on the Budget and contorting themselves describing it and wasting Parliament’s time. Or maybe, MSM has got better at editing them out and saving the reading public.